Coming into this announcement, the latest round of U.S. tariffs seemed likely to dominate the conversation. And while they certainly add another layer of uncertainty, the Bank’s message on their direct economic impact was relatively measured.
The products affected represent about 5% of Canadian exports to the U.S., and with government support programs in place, the Bank does not expect the new tariffs to have a significant impact on overall economic activity.
The bigger tariff risk is uncertainty — businesses delaying investment or hiring while they wait to see what comes next.
Meanwhile, the Bank’s eyes remain firmly on oil prices and the Strait of Hormuz.
Oil prices remain elevated, but so far, the impact on other goods and services has been limited. Inflation excluding gasoline as of July was 2.2%. The concern is how long higher energy prices persist.
As Tiff Macklem cautioned:
“The longer oil prices stay high, the greater the risk that higher energy prices spill over and turn into persistent inflation.”
For now, tariffs create downside risk to growth, while oil creates upside risk to inflation.
Two opposing pressures — giving the Bank good reason to stay on the sidelines while it waits for more clarity.
Should you have any questions or wish to review your mortgage options, please schedule a call.
2026 Bank of Canada Announcement Schedule:
October 28
December 9